Holocaust victims win breakthrough deal worth billions

The World Jewish Congress last night claimed a breakthrough in its battle for justice for victims and survivors of the Holocaust when Europe's biggest insurers accepted they would have to pay compensation.

The sums involved were not available last night. But some calculations for payouts to the victims, their families, survivors and trusts established for charitable causes have reached as high as $11bn (nearly £6bn).

The outline of a deal came on the day New York banking authorities approved the $10bn takeover of the US-based Bankers Trust by Germany's leading financial group, Deutsche Bank.

The merger had been blocked by the opposition of Jewish groups campaigning for compensation for the victims of Nazi persecution.

The momentum of the campaign for justice increased as a series of transatlantic and European financial mergers were proposed that gave the World Jewish Congress greater political leverage.

Previously companies had been content to let the cases brought against them work their way slowly through the courts.

The landmark deal with the European insurance groups Allianz of Germany, AXA of France, Generali of Italy and Switzerland's Winterthur and Zurich came after two days of tough negotiations in London.

Under the terms of the outline deal the companies will pay the pre-war value of life policies taken out by Holocaust victims. Both inflation and currency devaluation will be taken into account.

This means that a policy with a face value of $3,000 could now be worth $100,000.

'All sides agreed to the concept that the real value of a policy will be paid out,' said Elan Steinberg, the World Jewish Congress's executive director.

'The specific formula as to the interest rate applied and the currencies used and so forth will be detailed by the end of May, in time for the next meeting.

'We have achieved the breakthroughs on the key issues we were looking at. The victors today were the Holocaust survivors and the cause of justice.'

Several hundred thousand victims of the Holocaust are thought to have bought life insurance policies, but only a few are still alive. Many of them perished in Auschwitz and others died while the claims were in abeyance.

The settlement with the big European insurers, while critical, will not end the spate of Holocaust claims.

A battle is being fought between representatives of the Jewish community and the French financial industry; there are extensive claims being made over looted art works; and a controversy is raging over compensation for the use of slave labour by German industrial groups.

Twelve of Germany's largest companies have agreed to pay compensation to former slave labourers that is estimated to be worth $1.5bn.

The largest bill for compensation as a result of yesterday's deal is likely to fall on Generali, which is thought to have insured up to 80% of eastern Europe's Jews before the second world war. The company now owns Israel's largest insurance group.

The German firm Allianz, which owns Cornhill in Britain, faces claims because it insured a number of concentration camps, including Auschwitz and Dachau.

Zurich, which has advertised for claimants in US newspapers, believes its share of the pre-war market was just 0.02%.

Swiss banks agreed in August to pay $1.25bn to Jewish groups, ending years of bitter negotiations.

Agreement came only after the New York banking authorities refused to agree to the merger of Union Bank of Switzerland with Swiss Bank Corporation.

The same pressure was used by the New York banking comptroller Alan Hevesi to force Deutsche Bank's hand in its effort to buy Bankers Trust (approval of the purchase by the US central bank, the Federal Reserve, is still required).

Deutsche Bank was not helped by the disclosure, during the vetting process, that it had financed construction companies that built Auschwitz.

The World Jewish Congress was particularly angered by the companies' insistence that there could be no payouts without death certificates. Such documentation was impossible to obtain for most Holocaust victims./P>